Answer the questions to the case, “Salary Inequities at Acme Manufacturing,” at the end of Chapter 7. Include at least one outside source supporting your answers. Explain your answers in 200 words.
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Case Incident: Salary Inequities at Acme Manufacturing
Joe Black was trying to figure out what to do about a salary problem he had in his plant. Black recently took over as president of AcmeManufacturing. The founder, Bill George, had been president for 35 years. The company was family owned and located in a small eastern Arkansas town. It had approximately 250 employees and was the largest employer in the community. Black was a member of the family that owned Acme, but he had never worked for the company prior to becoming president. He had an MBA and a law degree, plus 15 years of management experience with a large manufacturing organization, where he was senior vice president for human resources when he moved to Acme.
A short time after joining Acme, Black started to notice that there was considerable inequity in the pay structure for salaried employees. A discussion with the human resources director led him to believe that salaried employees’ pay was very much a matter of individual bargaining with the past president. Hourly paid factory employees were not part of the problem because they were unionized with wages set by collective bargaining. An examination of the salaried payroll showed that there were 25 employees, ranging in pay from that of the president to that of the receptionist. A closer examination showed that 14 of the salaried employees were female. Three of these were frontline factory supervisors and one was the HR director. The other 10 were nonmanagement.
This examination also showed that the human resources director seemed underpaid, and that the three female supervisors were paid somewhat less than were any of the male supervisors. However, there were no similar supervisory jobs with both male and female job incumbents. When asked, the HR director said she thought the female supervisors may have been paid at a lower rate mainly because they were women, and perhaps Bill George did not think that women needed as much money because they had working husbands. However, she added that they may have been paid less because they supervised less-skilled employees than did male supervisors. Black was not sure that this was true.
The company from which Black had moved had a job evaluation system. Although he was thoroughly familiar and capable with this compensation tool, Black did not have time to do a job evaluation at Acme. Therefore, he decided to hire a compensation consultant from a nearby university to help him. Together they decided that all 25 salaried jobs should be in the job evaluation cluster, that they should use a ranking method, and that the job descriptions recently completed by the HR director were current and usable.
The job evaluation showed that there was no evidence of serious inequities or discrimination in the nonmanagement jobs. However, the HR director and the three female supervisors were underpaid relative to comparable male salaried employees.
Black was not sure what to do. He knew that if the underpaid female supervisors took the case to the local EEOC office, the company could be found guilty of sex discrimination and then have to pay back wages. He was afraid that if he gave these women an immediate salary increase large enough to bring them up to where they should be, the male supervisors would be upset, and the female supervisors might also want back pay. The HR director told Black that the female supervisors had never complained about pay differences, and they probably did not know the law to any extent.
The HR director agreed to take a sizable salary increase with no back pay, solving this part of the problem. Black believed he had four choices relative to the female supervisors:
- 1. To do nothing
- 2. To gradually increase the female supervisors’ salaries
- 3. To increase their salaries immediately
- 4. To call the three supervisors into his office, discuss the situation with them, and jointly decide what to do
What would you do if you were Black? Why?
How do you think the company got into this situation in the first place?
Why would you suggest Black pursue the alternative you suggested?